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Key Takeaways:
- Growth of Private Credit: Private credit AUM in Europe has grown significantly, increasing from $93 billion in 2013 to $505 billion by 2023.
- Investor Base: Initially dominated by institutional investors, the investor base is broadening out as private credit funds innovate product offerings for wealth investors.
- Advantages for Borrowers: Private credit offers borrowers confidentiality, flexibility and speed and reliability of execution, making it suitable for complex financing needs.
- Attractive Returns: Private credit has historically offered investors a yield premium and higher overall returns compared with traditional credit asset classes.
- Inflation Hedge: As a floating-rate debt instrument, private loans offer investors protection against inflation.
Private credit is emerging as one of the most dynamic growth areas in European finance today. As a relatively young asset class, however, investor awareness of the underlying assets, how the market functions and the potential investment advantages that private credit offers have yet to reach the mainstream among European investors.
European private credit AUM, 2013-2023 ($ billion)
European private credit AUM, 2013-2023 ($ billion)
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In short, private credit refers to privately negotiated loans between corporate borrowers and non-bank lenders, known as private credit funds. These funds typically maintain a strong focus on capital preservation, lending to high-quality companies in non-cyclical industries with healthy and stable cash flows.
Private credit’s growing popularity owes to its attractive income potential, track record for generating strong risk-adjusted returns ability to act as an effective portfolio diversifier.
Learn more about European Private Credit, the growth drivers propelling the asset class and why investors should consider adding European Private Credit to their portfolios.
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